Imperfect Information and the Reserve Price Dynamics In Auctions
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I study a hybrid bargaining model with an English auction in each state. The seller uses auctions to extract information about the bidders’ values of the object on sale. The bargaining element is introduced to maximize revenue, since the winning bidder has to exceed not only the second-highest bid but also the reservation price of the seller. This model can explain the following empirical facts from Ebay auctions: multiple relisting of similar items, the use of secret reserve prices, and the convergence of sale